President Ramaphosa Emphasizes Structural Reforms for Economic Growth

To achieve sustainable economic expansion, President Ramaphosa stressed the vital role of both public and private sector engagement in infrastructure development.

President Cyril Ramaphosa has underscored the necessity for robust collaboration between government and business to accelerate infrastructure investment and drive South Africa’s economic growth. Speaking during a Questions for Oral Reply session in the National Assembly on Tuesday, the President emphasized that overcoming structural challenges—particularly in energy supply and inefficiencies in freight and logistics—requires targeted reforms and strategic investments.

Government’s Commitment to Infrastructure Development

To achieve sustainable economic expansion, President Ramaphosa stressed the vital role of both public and private sector engagement in infrastructure development. The government has pledged to implement an ambitious infrastructure build programme, aimed at stimulating economic activity and creating an enabling environment for private sector investments.

The focus areas for investment include:

• Electricity generation and distribution
• Rail rolling-stock improvements
• Water distribution networks

These initiatives, the President explained, will not only improve essential services but also create job opportunities and enhance the overall competitiveness of South Africa’s economy.

Safeguarding Pension Fund Investments

Acknowledging concerns regarding the use of pension funds for infrastructure financing, the President clarified that such funds are private assets belonging to workers, intended for their retirement security. To ensure the responsible utilization of these resources, the government has implemented measures that offer investors a reasonable return while safeguarding their contributions.

In 2022, National Treasury introduced amendments to Regulation 28 of the Pension Funds Act, which redefined infrastructure investments and set an upper limit of 45% for pension fund allocations in infrastructure projects. Further adjustments have been made, including the separation of investment limits for hedge funds and private equity. The private equity allocation has been increased from 10% to 15%, thereby expanding investment opportunities in infrastructure-related projects.

Enhancing Investment Mechanisms

The government has also been working on complementary investment vehicles to streamline and incentivize institutional investors. As announced in the Medium-Term Budget Policy Statement of October 2024, the Minister of Finance outlined ongoing efforts to refine regulatory frameworks that support long-term economic development. These mechanisms aim to simplify investment processes and encourage greater participation from institutional investors in infrastructure initiatives.

Details regarding these investment vehicles will be unveiled in the forthcoming Budget Speech, scheduled for Wednesday, 12 March 2025. This announcement is expected to provide further clarity on how the government plans to balance public and private sector contributions to infrastructure development while ensuring sustainable economic growth.

As South Africa navigates its economic transformation, the President reaffirmed that effective partnerships between government and business will be crucial in unlocking new opportunities, overcoming economic bottlenecks, and fostering inclusive growth for all citizens.